Punjab-Sindh row over RGST may jeopardise IMF loan

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ISLAMABAD: The lingering controversy over right to seven services has put the Punjab and Sindh again at loggerheads and failure to implement Reformed General Sales Tax (RGST) on services may threaten the completion of IMF-sponsored programme, it is learnt.

Pakistan got one or two tranches of IMF loan during the decade of 90s when the IMF in most of the cases suspended its programme around seven times. There was one occasion during Musharraf-Aziz regime when Pakistan successfully graduated from the IMF programme. Pakistan has one month and 15 days to deliver on RGST issue when the ongoing $11. 3 billion package of IMF will expire, said the relevant sources.

Talking to reporters on the sideline of the PDF meeting, Advisor to Chief Minister, Sindh, Dr Kaiser Bengali said on Sunday that the services like shipping and courier related issues could only be resolved if all the stakeholders accepted that it was of Sindh to impose and collect such services then they could allow the federal government to collect tax from these services for interim period of one year.

 Sindh did not create stumbling block in the way to resolve RGST issue on goods and services, he said and added that the Centre and Sindh had struck a deal in July last which if accepted, RGST would have been enforced several months back.

He said that they had established Sindh Revenue Board and they would be able to collect certain services by themselves, adding in the same breath that they would also allow the FBR to collect certain services on their behalf.

The implementation mechanism, which was agreed by the Centre and Sindh was discussed with other provinces, he said and added that there were some disputes, which could be resolved amicably.

 We will not compromise that any one does not accept Sindh s right to collect tax on such services, he said and added it was principled stand, which could not be compromised. On other side, Punjab s Minister for Finance Tanveer Ashraf Kaira said that discussions were underway to resolve the issue of RGST on services. He said that the right to RGST on services should be given on the basis of usage of service instead of collection point of tax.

Answering a query about possibility of flood surcharge in the Punjab, he said that he did not think that Punjab would move ahead in this regard as CM Punjab had already stated its government s position in this regard. I will support any idea to impose flood surcharge in cabinet meeting but I don t think it will get through, he added.

When asked about fate of sasti roti, he said that it was a failed programme in Punjab and he opposed it during the cabinet meetings. Now the provincial government had stopped the programme of sasti roti in the aftermath of flood but the province spent Rs5 billion on it in first a few months against allocated amount of Rs7 billion for the whole financial year.

He said that the overdraft ceiling of the province increased from Rs27 billion to Rs37 billion. Now we are paying back of one billion rupees each month against the past piled up liabilities of overdraft amounting to Rs51 billion, which were now reduced to Rs40 billion after making payments of Rs11 to Rs12 billion.

Courtesy: Business Recorder

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